Information for Insolvency practitioners

As an insolvency practitioner you will no doubt think you have right on your side. The law tells you what you can do and your job is to push the hurdles aside and achieve an objective which is to recover as much you can for the creditors of the insolvent in respect of which you act. It is your job to maximise returns and stand for no nonsense. You will certainly not be fazed by the existence and conduct of legal proceedings through the courts.

What sort of cases do you have to think about particularly?

That old chestnut – the matrimonial home

Probably the bankrupt and spouse will go rushing off to a solicitor who will know nothing about insolvency issues and try fighting the case based on matrimonial issues. How tiresome. Then they will come up with all the counter-claims in the book. Of course making them stick is not very likely but there is a small problem – they can cause you to have to spend a huge amount of money in costs and time. Very often they will be legally aided so when you win, as very often you will expect to, you will not recover any costs.

Perhaps by that time, you will not be paying anything to creditors. Perhaps in fact there will not be enough money to pay the full fees of the solicitors and insolvency practitioners. That may mean you!

Does this sound familiar?

Debt collection and claims for money generally

As an insolvency practitioner you are very careful about ensuring that the figures are correct and that you have your facts correct. But it is not so easy when the counter-claims are presented. You consider that the chances are that they have been trumped up, especially in construction industry cases but proving it is just another matter. You will employ experts and gradually build up a case.

Not cheap though and no guarantees

Retention of title cases

You know just how difficult it is for these to stick and it is shock to the system when one comes along which does. Usually the ones which do will be claimed by big companies who have had good legal advice from solicitors who know how it works. When you fight them they probably have more money than you do.

What a risk!

Claims that an IP’s remuneration is excessive

The boot is on the other foot here because it is a third party, perhaps a group of creditors or, much more often, a bankrupt going for annulment who is making the claim

Have you had your costs assessed by the court? If you have you will know that it is a mine field. In fact the courts seem to use a completely different set of criteria to those you are accustomed to using.

And the outcome? Well you will get something and quite possibly the costs of assessment unless the other party has decimated your claim. But will those costs represent you true costs?

As an IP you have duties and responsibilities. In fact the burden is enormous. Quite apart from the extensive statutes and rules made thereunder, you have basic and fundamental duties to the creditors for whom you act and, in the case of annulments, the bankrupts too – do not forget it.

This means that you have to be commercial and prudent and avoid unnecessary costs. Phyrric victories are not really “good business”. You may come out of it with your remuneration intact in whole or in part but creditors want to see something better than that.

Mediation is a potential solution; there are never guarantees but the rate of success is extremely high. It must better business for an IP to spend a lot less time on a matter but recover his fees in full and maintain his standing with the creditors than spend four to ten times as much time and only collect a percentage of his fees and pay the creditors nothing.

Mediation will quite possibly involve compromise – compromise brought about by understanding the other party’s case better. If compromise is going to take place, it may as well be sooner rather than later.

Now read on...